Asset Quality and the Financial Performance of Commercial Banks in South Sudan
Loading...
Date
2023-11
Journal Title
Journal ISSN
Volume Title
Publisher
EdinBurg
Abstract
Banks are of great and noteworthy importance in preserving and promoting the advancement
of diverse economic sectors, making them crucial components of the economy. They shift the
resources' attention from areas with surpluses to those with deficits. However, majority of
nations have encountered banking issues that have necessitated significant banking system
reforms. The issues are primarily the result of domestic factors including poor banking
supervision, ineffective management, and insufficient capital. Making sure companies
participating in the sector are managed prudently is a crucial aspect of bank regulation. The
primary aim of this study was to determine the effect of asset quality and the financial
performance of commercial banks in South Sudan. An explanatory research design was used
in the study. The target populace was commercial banks in South Sudan. There were 29
commercial banks that existed in South Sudan between 2017 and 2021. The study used
purposive sampling to sample 23 banks that were in operation between 2017 and 2021.
Secondary information was used in the study. For analysis, the obtained information was
cleaned and imported into STATA 17. Descriptive statistics and regression analysis was
conducted. The inferential statistics used were correlation and regression. Descriptive
outcomes showed that the mean asset quality ratio from 2017 to 2021 for the commercial banks
in South Sudan was 0.262, with the least asset quality ratio being 0.622 and the most being
4.395. Trend outcomes were clear that asset quality was inconsistent amongst South Sudan
commercial banks. Outcomes were clear that asset quality negatively but significantly
impacted by the performance. The study concluded that asset quality had a negative and
noteworthy impression on financial success. As a result, the report advises banks to refrain
from holding too many loans relative to their overall assets, as this reduces liquidity and
negatively impacts the bank's ability to operate. The study suggests that banks implement
appropriate credit risk management procedures. This is because inadequate credit risk
management procedures lead to a large percentage of nonperforming loans, which eventually
have a negative impact on commercial banks' profitability.
Description
Article
Keywords
Citation
Odongo, G. N., Irungu, A. M. (2023). Asset Quality and the Financial Performance of Commercial Banks in South Sudan. Journal of Finance and Accounting, 3(3), 48-57.